employer mandate considerations
An ICHRA can be designed to meet the §4980H requirements which apply to Applicable Large Employers (ALEs)
§4980H Minimum Essential Coverage and Minimum Value Requirements:
Premium for lowest cost silver plan
Monthly employer reimbursement amount
Monthly employee cost used to determine affordability
Individual health coverage premiums vary by an individual’s location and age. This makes it a bit more challenging to determine affordability for all full-time employees. To help address this challenge, the proposed rules provide the following guidance:
- Rates by Age – Affordability can be based on the employee’s age on the first day of the plan year, or when the employee is first eligible for the ICHRA, to avoid having to make adjustments in accordance with age changes during the plan year.
- Location Safe Harbor – Instead of using the lowest cost plan available where the employee resides, an employer can use the cost of the plan at the employee’s primary site of employment. An employee’s primary site of employment is the location at which the employer reasonably expects the employee to perform services, which may be the employee’s residence if the employee does not have a particular assigned office space or a worksite to which to report.
- Look-Back Month Safe Harbor – An employer with a calendar year plan may use the monthly premium for the lowest cost silver plan for January of the prior calendar year. An employer with a non-calendar year plan year may use the monthly premium for the lowest cost silver plan for January of the current calendar year. The agencies have promised to provide employers with access to location-specific lowest cost silver plan premium data on a month-by-month basis.
- Non-Tobacco Rates – As with group health plans, affordability is based on plan premiums applicable to non-tobacco users.